Priority And Non Priority Debt

July 23, 2014

Following on from our recent post on what to do if you have debts we are now going to tell you how you can categorise them as either priority or non-priority. Do you know what a priority debt is? Do you know what a non priority debt is? Well don’t worry if you don’t as it will all be explained now.

Priority

What is a priority debt? A debt can be classed as a priority when a creditor has the legal power which could lead to the loss of various things depending on the debt. If you have an unpaid gas or electricity bill you may face disconnection whereas with a secured loan you may face loss of whatever the loan was secured on which could be your sofa, car, jewellery or even your house. Debt by rent arrears can lead to eviction by a county court order or if you don’t pay your mortgage you can face repossession. Income tax and child support debts may mean bailiffs can seize your possessions or more seriously you could be imprisoned for these debts. Further debts that can lead to the most severe punishment of imprisonment are unpaid; council tax, magistrate court fines, child maintenance and TV licence.

So now you know what priority debts are. They are debts which hold serious consequences if they go unpaid such as disconnection, repossession or imprisonment. So these are the debts that need to be dealt with first to avoid any of these actions taking place.

Non Priority

So now you know what a priority debt is can you guess what a non priority debt is? It is a debt which is considered to not hold as serious or possibly as imminent consequences as a priority one if it goes unpaid. Non-priority debts include those from credit cards, catalogues, unsecured loans, water bills or loans from friends and family. Although repayment of these debts may be considered non priority it can still result in serious consequences. A creditor could decide to apply for a county court judgement (CCJ). Once a county court judgement is taken against you, you must keep to the terms of the court order which if you don’t your creditor can go back to court and apply to enforce the debt. Depending on the debt bailiffs could be sent to seize non-essential goods or you could be made bankrupt meaning if you’re a homeowner you risk losing your home.

So in reality both priority and non priority debts can have serious consequences although priority debts’ may be more imminent than non priority. However some people may class non priority debts as priority depending on their circumstances such as that from mobile phones or family and friends.

Another tip to remember is to make yourself aware of which debt is a priority and which isn’t, so for example immediate action cannot be taken such as disconnection if you don’t pay your water bill as it is a human right. So it is advisable to make sure bills such as gas and electricity are taken care of first to avoid disconnection.

It is important to try and sort out any debt as soon as possible to prevent unwanted action or stress in your life and you can receive help from Fair Money Advice in how to deal with debt and avoid this.